Find the cash flow from assets (CFFA) of the following project.
|One Year Mining Project Data|
|Project life||1 year|
|Initial investment in building mine and equipment||$9m|
|Depreciation of mine and equipment over the year||$8m|
|Kilograms of gold mined at end of year||1,000|
|Sale price per kilogram||$0.05m|
|Variable cost per kilogram||$0.03m|
|Before-tax cost of closing mine at end of year||$4m|
Note 1: Due to the project, the firm also anticipates finding some rare diamonds which will give before-tax revenues of $1m at the end of the year.
Note 2: The land that will be mined actually has thermal springs and a family of koalas that could be sold to an eco-tourist resort for an after-tax amount of $3m right now. However, if the mine goes ahead then this natural beauty will be destroyed.
Note 3: The mining equipment will have a book value of $1m at the end of the year for tax purposes. However, the equipment is expected to fetch $2.5m when it is sold.
Find the project's CFFA at time zero and one. Answers are given in millions of dollars ($m), with the first cash flow at time zero, and the second at time one.